Negative gearing and multinational tax penalties - Sky News To the Point

Posted by Andrew Leigh MP5sc on February 29, 2016

E&OE TRANSCRIPT

TELEVISION INTERVIEW SKY NEWS TO THE POINT MONDAY, 29 FEBRUARY 2016

SUBJECT/S: Negative gearing, multinational tax

PETER VAN ONSELEN: Thanks for your company Dr Leigh.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure, Peter.

VAN ONSELEN: Let me ask you straight off the top about this; are you worried about a scare campaign? As you know I've written in favour of your negative gearing policy. I take the view that it is long overdue that something gets done in that space rather than quibbling about the detail, akin to what Saul Eslake said, don't let the perfect be the enemy of the good. But what about a scare campaign, sometimes in politics they can often be effective and it looks like that's where the Government is going on your negative gearing policy?

LEIGH: Well Peter if you constantly worry about scare campaigns you never do anything in politics. Now the Prime Minister has delivered more waffles than a breakfast café. He’s unable to actually put his ideas on the table. Labor has done it. They're not universally popular but it's a set of policies which adds to the budget bottom line, which closes down some of our fastest growing tax concessions, which doesn't affect existing investments which adds to housing supply.

We know in Australia that the chance for a young person with low income buying their home is half of what it was in the early 1980s. Sydney is the second most unaffordable city in the world, just after Hong Kong, Melbourne is the fourth most unaffordable, measured on house price to income ratios. We just can't go on with an Australia where young Australians can't make their way into the housing market. Labor's plan tackles that challenge which is why it has been welcomed by everyone from Jeff Kennett to Saul Eslake and why it in fact reflects ideas that have been talked about for a decade in Australian politics but until Bill Shorten and Chris Bowen, no one had the courage to act.

KRISTINA KENEALLY: Dr Leigh, you're there acknowledging that there in fact part of the impetus for Labor's negative gearing policy is indeed to allow first home buyers to have access to the housing market presumably that is about making housing more affordable but how do you then marry that out with the Prime Minister's claim that you're going to make everyone's home worth less than it currently is?

LEIGH: Kristina, the Prime Minister is running a desperate scare campaign which frankly makes him look a whole lot more like Tony Abbott in a silver wig than the economic leader that he promised that he would be. Last year house prices grew 11 per cent. Homes will continue to appreciate in value as they do in places like the United Kingdom and the United States that don't have our almost unique combination of negative gearing and a capital gains tax break.

VAN ONSELEN: Let me ask you though Dr Leigh, in the week or two after it was announced some of your members of Parliament were a little bit sketchy about being able to confirm to us for example, whether a knock down house gets included etc. I realise that the document says that it's the ABS definition but you want to make sure that your MPs are right across this, surely?

LEIGH: Peter I’d take you to any Labor MP to talk about tax before I’d take you to the Prime Minister or the Treasurer. Let's face it, Malcolm Turnbull is back in that world he was in 2005 when his idea of tax reform was to produce 281 plans. Peter Costello as you well recall ridiculed him at the time, saying well if you didn't like one there are a couple of hundred more you can choose from. We thought we'd get a different Malcolm Turnbull when he came Prime Minister but increasingly Australians are wondering what's the point of the Turnbull Government? That's a question being asked by people from Paul Kelly to Laura Tingle and Peter Hartcher, respected economic commentators in Australia who expected that the Prime Minister would engage in a serious discussion about the nation's challenges rather than just running cheap Tony Abbott style scare campaigns.

KENEALLY: Dr Leigh what do you make of reports today that the Government is looking at going for an economic statement in April in advance of the budget. Does that leave open the potential for a double dissolution that would come on immediately after the budget?

LEIGH: It certainly does Kristina. We're ready for an election anytime the Government wants to bring one on. I'd put our policies up against the Coalition's not just in economic leadership but also in making sure our schools have the resources they need, that our hospitals are appropriately funded, that we have policies that fit progressive Australia in the area of marriage equality for example. I moved a private member's motion today on multinational tax, an issue that we've been tackling the Government on continually over the last five years. Going back to the work done by Wayne Swan and David Bradbury, today our policy builds on Labor's $7 billion multinational tax plan to raise the penalties on multinationals who do the wrong thing from the current $5400 which is frankly not just good enough to a more reasonable $270,000.

VAN ONSELEN: Let me ask you this Dr Andrew Leigh, we've got Question Time coming up very shortly and we will cover that here on Sky News and I will make some predictions about what might and might not get raised. Are you going to continue to probe the Government to try to actually get them to unveil during parliamentary sittings what some of their details are around their tax policy because if it's right that they're going to put this out in April and then come back for the budget and possibly go straight to the polls there will literally be no parliamentary scrutiny of their agenda that they want to take to a campaign.

LEIGH: Peter it would clearly be important to have that parliamentary scrutiny but also to have the broader public conversation. It's one of the reasons we had our multinational tax plan out in the first half of the parliamentary term because good economic changes are a conversation, not a dictator saying here's what we're going to do. That conversation was beginning from the Re:Think discussion paper that Joe Hockey brought out, where community and business sector groups spent hundreds of hours and millions of dollars on preparing submissions which have then all been dumped by this Government.

Someone said something interesting to me this morning, they said that the problem that Malcolm Turnbull and Scott Morrison have is that they haven't even set out the parameters for tax reform. ‘Work, save, invest’ isn't a guiding statement of vision, it's just another three word slogan. It doesn't give the Government a clear sense as to where it wants to go in order to deal with an inequality at a 75 year high, growth being downgraded, wages growth now at the lowest in 18 years and the challenges coming out of a fragile economy in Europe and China. All of those things demand a long-term vision, not simply throwing something together in April to suit a political timetable.

KENEALLY: Andrew Leigh can I take you back to Labor's announcement about multinational tax penalties, you pointed out quite rightly that a $5400 fine for a company that has got over a billion dollars in turnover is really chicken feed. It's not going to provide any disincentive. Labor's announced a fine of $270,000, you say that's a factor of 50 but really if you've got a turnover of over a billion dollars, isn't there a risk that there a company would just factor that in as a cost of doing business? How did you come to that figure, why do you think that's a disincentive?

LEIGH: Kristina, great question. At the moment as you say, the penalty is low. In fact I was doing some research for the speech I gave this morning and it turns out you can cop a worse penalty for streaking across the Sydney Cricket Ground or barging your way into a Gold Coast arts venue. Why $270,000? Well it goes up from a slap on the wrist to a serious penalty. But in addition we've sad that if the company ignores that penalty that triggers an audit by the tax office. That adds not only a financial penalty but also an accountability one, so we think that those two penalties together will force better compliance for those important country-by-country reports. Again, I hope that the Government picks up our changes. Last week in the Senate, the Government backed Labor amendments to another multinational tax law, I am somewhat cautiously optimistic that they'll do the right thing and back Labor on this.

VAN ONSELEN: Dr Andrew Leigh, we appreciate you joining us on To the Point we know you've got to get to Question Time, thanks for your company.